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Venroy: the new boardshort

A small Australian company is laying claim to leading a new fashion trend in ‘above the knee’ board shorts, challenging existing leaders including Billabong (ASX: BBG), Rip Curl, Oakley, Hurley, O’Neill and Quicksilver.

Starting out in a small factory in Sydney’s inner west just three years ago, Venroy Boardshorts has now expanded offshore selling their products through traditional bricks and mortar stores in Tokyo, New York and Los Angeles according to the Australian financial Review (AFR).

From their first batch of 60 pairs of men’s boardshorts, Venroy expects to sell more than 18,000 units next year, including T-shirts. That’s 35% more than the company sold in 2013 by volume. 40% of sales are in the US, 30% in Australia and 15% in Japan, with the remainder coming from countries such as Canada, Spain and France.

Venroy has also managed to crack the resort market, establishing deals with Haman in Australia, Four Seasons Hotels, W Hotels and Bellagio Las Vegas. A large percentage (20%) of sales comes from its online stores, with the company looking to ramp this up due to the higher margins on offer. With Venroy boardshorts retailing for $100 a pair and T-shirts for $60 according to the AFR, the company is charging higher prices than its competitors. A pair of traditional long Billabong, Rip Curl or Quicksilver boardshorts costs between $60 and $80 in Australian stores and online.

It seems Venroy have hit on the trend of shorter boardshorts, with more men going for the new style over the longer, below-the-knee designs, particularly on the US West Coast, according to one of the company’s founders, Theo Smallbone.

The key for Venroy will be its ability to turn sales of shorter boardshorts into sales of other products. Fashion can be fickle, and next season could see a new style come into fashion, forcing Venroy to adapt, or lose sales at a rapid rate. Fashion retail is not a game for the faint-hearted, as experienced campaigners, Billabong, Specialty Fashion Group (ASX: SFH), Premier Investments (ASX: PMV), David Jones (ASX: DJS) and Myer Holdings (ASX: MYR) can attest.

Foolish takeaway

We wish Venroy all the best of luck with their shorter boardshorts, as well as their other products. We also hope the company doesn’t end up in the same situation Billabong has found itself in.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

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